AviChina Industry and Technology is pinning its hopes on its aviation products to become an earnings driver as its vehicle division continues to underperform amid a punishing price war. In an interview with the South China Morning Post, vice-president Li Hui said aviation products sales were expected to grow at least 20 per cent in the next few years. 'In China, aviation product demand generally grows at double the rate of gross domestic product,' he said. 'The outsourcing of components manufacturing by major aircraft makers to China will also drive growth.' AviChina is the country's largest commercial helicopter maker and one of the biggest makers of small jets, economy cars and minivans. The company's net profit for the first half plunged 78.1 per cent year on year to 30.15 million yuan, despite turnover slipping only 1.25 per cent. AviChina suffered a margin squeeze due to aggressive price cutting and increased raw material costs. Operating margin in its vehicle division fell to 0.74 per cent in the first half from 4.32 per cent in the same period last year, while that for aviation products grew from 3.11 per cent to 7.54 per cent. The company's aviation products division saw its interim turnover contribution to the company rise 5.28 percentage points to 17.44 per cent year on year, helped partly by a 72 per cent revenue jump in components production for European and United States aircraft giants Airbus and Boeing. Mr Li said its contribution would continue to rise in the second half as more deliveries of aircraft were expected. The company expects to deliver 45 helicopters this year - up from 38 units last year, while car sales are targeted to rise 16 per cent to 360,000 units this year, a Macquarie Securities research report quoted management as saying. Mr Li said AviChina was co-developing new aircraft models with European giant Airbus and was participating in Airbus's establishment of research and development base in China. He declined to provide further details, saying only that the base would be set up 'in the near future'. Airbus' parent, European Aeronautic Defence and Space, bought a 5 per cent stake in AviChina during its initial public offering in 2003. AviChina's shares have fallen 64 per cent since their listing. AviChina delivered six small aircraft to China Southern Airlines this year and has delivered one of five planes ordered by China Eastern Airlines. More orders have been received for these aircraft, which seat up to 50 passengers, but Mr Li did not give details. The state-backed China Aviation Industry Development Research Centre forecast in 2003 that demand for jets with 30 to 50 seats would reach 53 units between 2007 and 2011. It said demand would rise to 77 units between 2012 and 2016. AviChina and parent China Aviation Industry Corp II share the small regional jet market with China Aviation Industry Corp I, which focuses on 70 to 90-seat jets.